This Stock Pledge Agreement (this “Pledge
Agreement”) dated as of December 3, 2008, is executed
and delivered by UT Gaming, Inc., a Delaware corporation
(“Pledgor”), to National City Bank, a national banking
association (“Lender”).
A. Contemporaneously herewith, Lender is
providing certain loans, extensions of credit and other financial
accommodations (collectively the “Financial
Accommodations”) to Youbet.com, Inc., a Delaware corporation
(“Youbet”), United Tote Company, a Montana corporation
(“United Tote”), and Youbet Services Corporation, a
Delaware corporation (“Youbet Services”) (Youbet,
United Tote and Youbet Services are each individually a
“Borrower” and collectively the
“Borrowers”), evidenced by, among other things,
(i) that certain Loan and Security Agreement of even date
herewith by and between Borrowers and Lender (as amended, renewed
or restated from time to time, the “Loan Agreement”),
(ii) that certain Revolving Note of even date herewith
executed and delivered by Borrowers to Lender in a maximum
aggregate principal amount of up to Five Million and no/100 Dollars
($5,000,000.00) (as amended, renewed or restated from time to time,
the “Revolving Note”), (iii) that certain Term
Note A of even date herewith executed and delivered by Borrowers to
Lender in the original principal amount of up to Ten Million and
no/100 Dollars ($10,000,000.00) (as amended, renewed or restated
from time to time, “Term Note A”), and (iv) the
other documents, agreements and instruments referenced in any of
the foregoing or otherwise executed and delivered from time to time
by or on behalf of one or more Borrowers to Lender (the
“Other Agreements”; the Other Agreements, together with
the Loan Agreement, the Revolving Note and Term Note A are
collectively the “Loan Documents”).
B. Lender is willing to provide the
Financial Accommodations to Borrowers provided, among other things,
Pledgor executes and delivers this Pledge Agreement to
Lender.
C. Pledgor acknowledges and agrees that
(i) Pledgor is a Guarantor and owns one hundred percent (100%)
of the outstanding capital stock of United Tote, and is thus
benefitted by the Financial Accommodations made by Lender to
Borrowers, (ii) Pledgor’s execution and delivery of this
Pledge Agreement is a material inducement to Lender providing the
Financial Accommodations to Borrowers, and (iii) without this
Pledge Agreement, Lender would not have provided the Financial
Accommodations to Borrowers.
D. In consideration of the foregoing, and
other good and valuable consideration, the receipt and sufficiency
of such consideration is hereby acknowledged by Pledgor, Pledgor
hereby covenants unto and agrees with Lender as set forth in this
Pledge Agreement.
2.
Defined Terms . Capitalized terms used herein and not
otherwise defined herein shall have the meanings set forth in the
Loan Agreement.
3.
Pledge . Pledgor hereby pledges to Lender and grants
to Lender a first position priority security interest and lien in
and to the following (collectively the “Pledged
Collateral”):
(a) All of the shares of capital stock of
United Tote, now or at any time or times hereafter owned by Pledgor
or held beneficially for Pledgor, and the certificates representing
the shares of such capital stock (such now-owned shares being
identified on Exhibit “A” attached hereto and made a
part hereof), all options and warrants for the purchase of shares
of the capital stock of United Tote now or hereafter held in the
name of Pledgor or held beneficially for Pledgor (said capital
stock, options and warrants and all capital stock held in the name
of or beneficially for Pledgor as a result of the exercise of such
options or warrants being hereinafter collectively referred to as
the “Pledged Stock”), herewith delivered to Lender
accompanied by stock powers in form and substance acceptable to
Lender (the “Powers”) duly executed in blank, and all
dividends, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of, or in
exchange for, any or all of the Pledged Stock;
(b) One hundred percent (100%) of all
additional shares of stock of United Tote acquired by Pledgor in
any manner, and the certificates representing such additional
shares (any such additional shares shall constitute part of the
Pledged Stock and Lender is irrevocably authorized to amend Exhibit
“A” from time to time to reflect such additional
shares), and all options, warrants, dividends, cash, instruments
and other rights and options from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or
all of such shares;
(c) The property and interests in property
described in Section 5 below; and
(d) All proceeds of the
foregoing.
4.
Security for the Liabilities . The Pledged Collateral
secures the full and timely payment and performance of the
Liabilities and the Covenants, including, without limitation, the
Liabilities and Covenants referenced in or evidenced by the Loan
Documents.
5.
Pledged Collateral Adjustments . If, during the term
of this Pledge Agreement:
(a) Any stock dividend, reclassification,
readjustment, split or other change is declared or made in the
capital structure of United Tote or any option included within the
Pledged Collateral is exercised, or both, or
(b) Any subscription warrants or any other
rights or options shall be issued in connection with the Pledged
Collateral, then such shares, warrants, rights, options or other
securities shall be immediately delivered to and held by Lender
under the terms of this Pledge Agreement and shall constitute
Pledged Collateral hereunder; provided , however ,
that nothing contained in this Section 5 shall be deemed as
Lender’s consent to any stock dividend, issuance of
additional stock, warrants, rights or options, reclassification,
readjustment, split or other change in the capital structure of
United Tote except as set forth in the Loan Agreement.
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6.
Subsequent Changes Affecting Pledged Collateral .
Pledgor represents, warrants and covenants unto Lender that it has
made its own arrangements for keeping itself informed of changes or
potential changes affecting the Pledged Collateral (including, but
not limited to, rights to convert, rights to subscribe, payment of
dividends, reorganization or other exchanges, tender offers and
voting rights), and Pledgor agrees that Lender shall not have any
obligation to inform Pledgor of any such changes or potential
changes or to take any action or omit to take any action with
respect thereto. Lender may, after the occurrence and continuance
of an Event of Default, without notice and at its option, transfer
or register the Pledged Collateral or any part thereof into its or
its nominee’s name with or without any indication that such
Pledged Collateral is subject to the security interest hereunder.
In addition, upon the occurrence and continuance of an Event of
Default, Lender may at any time exchange certificates or
instruments representing or evidencing Pledged Shares for
certificates or instruments of smaller or larger
denominations.
7.
Representations, Warranties and Covenants . As of the
date hereof, Pledgor further represents, warrants and covenants
unto Lender as follows:
(a) Pledgor is the sole legal and
beneficial owner of all the shares of the common stock of United
Tote set forth on Exhibit “A” free and clear of any
lien or encumbrance, except for the security interest created by
this Pledge Agreement, and that such stock constitutes one hundred
percent (100%) of the issued and outstanding capital stock of
United Tote as of the date of this Pledge Agreement;
(b) All of the Pledged Stock has been duly
authorized, validly issued and is fully paid and
non-assessable;
(c) Pledgor has full legal capacity to
enter into this Pledge Agreement;
(d) There are no restrictions upon the
voting rights associated with, or upon the transfer of, any of the
Pledged Collateral (except as may be required in connection with
such disposition by laws affecting the offering and sale of
securities generally);
(e) Pledgor has the right to vote, pledge
and grant a security interest in or otherwise transfer such Pledged
Collateral free of any liens or encumbrances;
(f) No authorization, approval, or other
action by, and no notice to or filing with, any governmental
authority or regulatory body or any other person or entity is
required either (i) for the pledge of the Pledged Collateral
pursuant to this Pledge Agreement or for the execution, delivery or
performance of this Pledge Agreement by Pledgor, or (ii) for
the exercise by Lender of the voting or other rights provided for
in this Pledge Agreement or the remedies in respect of the Pledged
Collateral pursuant to this Pledge Agreement (except as may be
required in connection with such disposition by laws affecting the
offering and sale of securities generally and except for those
authorizations and approvals already obtained or notices already
provided);
(g) The pledge of the Pledged Collateral
pursuant to this Pledge Agreement, together with the delivery to
Lender of the Pledged Collateral as required hereunder, creates a
valid and perfected first position priority security interest in
the Pledged Collateral, in favor of Lender securing the full and
timely payment of the Liabilities and performance of the Covenants;
and
(h) The Powers are duly executed and give
Lender the authority they purport to confer.
The representations, warranties and covenants
set forth in this Section 7 shall survive the execution and
delivery of this Pledge Agreement.
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8. Voting
Rights . During the term of this Pledge Agreement, and
except as provided in the next sentence of this Section 8,
Pledgor shall have the right to vote the Pledged Collateral on all
corporate questions in a manner not inconsistent with the terms of
this Pledge Agreement. Upon the occurrence and continuance of an
Event of Default, Lender may, at Lender’s option and
following written notice from Lender to Pledgor, exercise all
voting powers pertaining to the Pledged Collateral, including the
right to initiate and take shareholder action by written consent,
and Pledgor hereby irrevocably constitutes and appoints Lender as
Pledgor’s proxy and attorney-in-fact, with full power of
substitution, to do so at such time. This proxy is coupled with an
interest and is irrevocable and shall continue until the
termination of this Pledge Agreement in accordance with
Section 15.
9.
Dividends and Other Distributions .
(a) So long as no Event of Default has
occurred or would result therefrom:
(i) Subject to Section 5 hereof,
Pledgor shall be entitled to receive and retain any and all
dividends and interest paid in respect of the Pledged Collateral;
and
(ii) Lender shall execute and deliver (or
cause to be executed and delivered) to Pledgor all such
proxies
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